Open versus proprietary: A battleground for smart home systems

This is a contributed piece by Thomas Rockmann, Vice President – Connected Home, Deutsche Telekom

There can be little debate that the era of the smart home is upon us - analysts at Strategy Analytics predict that by 2019 nearly 30 per cent of Western European homes will have a type of smart system, with revenues from connected home related hardware, services and installation reaching nearly €15.46 billion ($16.44 billion). In another key industry bellwether moment, global tech manufacturer Samsung announced last year that 90 per cent of all products that it manufactures will be internet-connected by the end of 2017.

However, as devices begin to flood onto the market, there is one key battleground that remains in flux, the question of open versus proprietary. Due to the intense pressures driving the smart home market in this early stage, the decision between open and proprietary is often being coloured by short-termism, rather than long-term pragmatism. Deutsche Telekom believes that it is open non-proprietary systems, services and platforms that are the better option - for both consumers and providers.

For consumers there is a particularly distinct reason to choose open, and that is wider interoperability. In the early days of the smart home market this may seem less of an issue, where homes may only have a few disparate devices, but the potential of the smart home ecosystem demands full interoperability between devices and sensors, lighting and cameras, not just tomorrow or next year but many years into the future. Anything less will lead to consumer disillusionment and hinder uptake. This same issue is of course key for businesses operating in the IoT space too - in order to develop new, compelling, consumer led propositions, a deeper level of integration and data visibility will prove essential.

This said, the market is already congested with platforms vying for attention - from Nest and HomeKit to Deutsche Telekom’s QIVICON and Amazon’s Echo, there are a multitude of options, offering an incredibly diverse range of benefits. Some manufacturers have created their own platforms and protocols, others have opted for open source or industry standards, while yet more have interpreted industry standards and subsequently manipulated them for a host of reasons - some laudable, such as increased security for their customers, some less so, simply to increase margins.

Deutsche Telekom believes that companies need to work more closely together in order to create truly intuitive and seamless experiences for consumers as well as to bring about the necessary economies of scale - in the medium to long term, a platform-based architecture is the only sustainable approach to this market.

The open vs proprietary debate also has clear and significant ROI ramifications. While the latter route is often perceived as being more rapid in terms of delivering product to market, this is not only untrue, but also extremely short term thinking. In-house proprietary platforms require considerable investment and management overheads only increase over time - and that’s before considering issues such as security. Recent research found that more than 90% of in-house developed applications contained serious and exploitable flaws, for example. The complexities of managing software updates ‘Over The Air’ are significant as well of course, although many of these issues can be sidestepped entirely by white-labelling rather than bespoke in-house builds.

Another key issue can be the surrounding and supporting developer community, which a manufacturer effectively buys into when white-labelling a platform or choosing an open platform with a vibrant developer community already in place. Ignoring the importance of this can be a fatal mistake for even the largest enterprise - the technology road is well-paved with strong technical products which failed to attract and - as importantly - retain this community spirit.

Aside from the technical requirements and benefits of an open ecosystem approach, the most powerful argument for non-proprietary platforms is the increased opportunity for partnership. By starting your journey with an open and agile platform, the possibilities for working with multiple partners at different stages of the value chain is significantly increased.

The benefits of open versus proprietary are broad and varied. In the long run, no company or brand can establish the connected home alone, and those who think that they can will not succeed. Our homes are too personal to all of us, and no consumer wants to be told what products or brands he or she can or cannot buy. While the smart home space is undoubtedly growing at an explosive rate, it will be open architecture platforms that will offer the faster route to market and ongoing success and sustainability in the connected home and beyond. The other advantage brought by open compared to proprietary is perhaps the most important, as it relates directly to the end consumer. By using open rather than proprietary, the end consumer has a larger range of compatible devices to choose from which, in turn, gives them even more, personalised usage possibilities within their own homes, which is what every homeowner really wants.